Car Insurance Deductible From Auto Accident Tax Return
While tax time can be stressful, it's an important opportunity to claim expenses throughout the year and get the maximum refund. As you're gathering your tax forms and meeting with your accountant, you may be asking yourself – is my car insurance premium tax deductible? The short answer is: maybe. Depending on how you use your car, you may be able to deduct certain expenses related to your insurance premiums – or even insurance deductible. Here are a few things to know about writing off your car insurance when filing your tax return. Unless you use your car for business-related purposes, you are likely ineligible to claim your auto insurance premium on your tax return. Business-related purposes may include using your car to pick up or deliver business supplies, driving to visit clients, or driving to a business conference. Simply commuting to and from work, however, does not count as a business-related purpose. Some taxpayers use their automobile as an integral part of their job, and in those cases insurance costs may be deducted at tax time. You may qualify for this deduction if: In addition to insurance premiums, you may also be able to deduct other auto-related costs including gas, repairs, parking and even value depreciation – as long as you can prove that these costs are directly related to business use. In order to take deductions, your auto-related costs must be more than 2% of your adjusted gross income (AGI). In other words, if your adjusted gross income is $50,000 annually, any auto-related costs you plan to claim must exceed $1,000 (which is 2% of $50,000). If auto-related costs do not exceed 2%, you cannot claim these costs on your tax return. Regardless of whether you use your car for business or personal use, you may be able to claim loss deductions if your vehicle was stolen or deemed a "total loss." (A car is considered a total loss if it is damaged to the point of being permanently un-drivable.) In order to qualify for a deduction for a car that is stolen or declared a total loss: It's important to discuss filing an auto-related tax deduction with your accountant before sending your tax return. Your accountant will be able to advise you on what deductions you qualify for and how to correctly complete your tax forms. Since tax time comes at the same time every year, it may also be a good reminder to schedule an On Your Side review to ensure that you have the coverage you need and are taking advantages of the right auto insurance discounts.
If you use your car strictly for personal use, you likely cannot deduct your car insurance costs on your tax return.
If you do use your car for business-related purposes, you may be able to deduct part of your insurance premium.
If you suffered a vehicle loss or theft this year, you may be able to deduct it on your tax return.
Car Insurance Deductible From Auto Accident Tax Return
Source: https://www.nationwide.com/lc/resources/auto-insurance/articles/is-auto-insurance-tax-deductible